Sunday, February 24, 2013 11:14 pm

ADB president leading name for Japan central bank

By ELAINE KURTENBACHAP Business Writer

Prime Minister Shinzo Abe is preparing to nominate Asian Development Bank President Haruhiko Kuroda to head Japan's central bank, local reports said Monday.

Abe was expected to announce the plan later in the day, said NHK television and major newspapers, including the Nikkei, or Nihon Keizai Shimbun, Japan's leading financial newspaper.

Top members of the ruling Liberal Democratic Party were meeting with opposition party leaders to seek their support for the nomination, the reports said.

The current Bank of Japan governor, Masaaki Shirakawa, will step down on March 19, three weeks before his term ends. Abe intends to formally propose his replacement to parliament within this week so as to allow a smooth succession, said government spokesman Yoshihide Suga.

"It will be most important to pursue the macroeconomic strategy outlined by the administration," Suga told reporters at a routine briefing.

Kuroda is an Oxford-educated former vice minister of finance who is thought to back Abe's strategies for seeking to revive Japan's economy by fighting deflation through monetary easing and hefty government spending.

Those expectations have lifted share prices and spurred a further decline in the value of the yen, which has weakened by about 20 percent against the U.S. dollar since last fall.

By midday Monday, the benchmark Nikkei 225 stock index was up nearly 2 percent at 11,607.70. The Japanese yen was trading near 94.10 to the U.S. dollar.

Since taking office in late December, Abe has pushed through a raft of policies aimed at helping Japan escape from recession through heavy public works spending and other policies meant to restore sustainable growth in the world's third-largest economy. Japan is struggling with the rapid aging of the population and the biggest public debt burden among leading industrial economies.

After months of lobbying by Abe, even before the Liberal Democrats took power following a landslide win in a Dec. 16 election, the Bank of Japan joined with the government in setting a 2 percent inflation target. So far, massive asset purchases by the central bank and years of near-zero interest rates have done little to boost investment or hiring by corporations put off by slack domestic demand.

"Japan needs something dramatic to happen. They are stuck," said David Harvey, director of the Canberra, Australia-based consultancy Asia Financial Group. He described Kuroda as a "smart cookie."

Shirakawa has chafed at Abe's pressure for more aggressive action from the central bank, and Abe's strong stance on monetary policy has raised concern he may be violating the Bank of Japan's autonomy.